Markets Digest a Greek Downgrade But Who Cares What the Rating Agencies Think?

European shares were expected to open lower Tuesday, as investors get their first chance to react to Moody's downgrade of Greece's credit rating.

Moody's Investors Service on Monday cut Greece's government debt rating by four notches to Ba1 from A3, following a similar move by Standard & Poor's in April. Traders said that while the move didn't come as a surprise, it brought the issue of sovereign debt to the fore again.

The downgrade "has been a long time coming and doesn't materially change the current environment with respect to what the markets know about Greece and the problems in Europe," said Michael Hewson at CMC Markets. "However, the markets' sensitivity to bad news has seen the recent revival in risk appetite knocked back, highlighting the fragile state of investor sentiment in the current environment."